Government's Revenue Receipts
Revenue receipts can be defined as the proceeds of taxes, interest and dividend on investments done by the government, taxes and other receipts for services provided by the government. They can be defined as income receipts of the government from various sources. Government revenue is quite literally the medium for government expenditure. Taxation is the most important source of income for all governments. Taxes can be defined as an involuntary fee levied on individuals, corporations, and institutions to finance government activities. Tax revenue forms a major part of the Union Budget. Taxes are collected both from direct sources and indirect sources.
1)Direct Tax
Direct tax is the tax that is paid directly by individuals and companies to the government, without the involvement of any intermediaries. For instance, income tax, wealth tax, corporation tax, property tax are all direct taxes. The higher the capability of paying is, the higher the taxes are. It promotes equality among the citizens as each person is charged according to their own incomes. The burden of paying direct taxes cannot be shifted to another person. The collection of direct taxes is however, a long and slow process.
2)Indirect Tax
Indirect taxes are those taxes that are collected by intermediaries from individuals and corporations. For instance, Goods and Services Tax (GST), Sales tax and Excise tax are all indirect taxes. These taxes can be passed on to another entity. We pay indirect taxes on every item that we purchase as a consumer. This is because taxes are imposed on all sorts of goods and services. People do not feel like they’re being taxed because indirect taxes are included in extremely small amounts. Their collection is relatively much easier.
Revenue receipts of the government are divided into two broad categories:-
a)Tax revenue receipts – Tax revenue includes proceeds of taxes and other duties that the government imposes on the public and the various corporations. The sum of all these receipts from taxes are called tax revenue receipts. They can be from direct or indirect taxes.
b)Non- tax revenue receipts – It is the recurring income of the government that is generated by sources other than taxation. Some of the major sources of non-tax revenue are interests that are received by the government on various loans, power supply fees, license fee, fines and penalties, grants from various organizations, forfeitures etc.
Fines and penalties are imposed by the government for the non-payment of taxes.
Many enterprises are owned and managed by the government. The profits received from them is an important source of non-tax revenue. For example, in India, the Indian Railways, Oil and Natural Gas Corporation (ONGC), Steel Authority of India (SAIL), Dredging Corporation, amongst other companies are owned by the Government of India. The profit generated by them is a source of revenue to the government.
Gifts and grants are received by the government when there are natural calamities like earthquakes, floods, famines, etc. Citizens of the country, foreign governments and international organizations like UNICEF, UNESCO, etc. donate during times of natural calamities.
Special assessment duty is a type of levy imposed by the government on the people for getting some special benefit. For example, in a particular locality, if roads are improved, property prices tend to rise in the future. The property owners in that locality will benefit due to the appreciation in the value of property. Therefore, the government imposes a levy on them which is known as special assessment duties.
